Competition in the International Connectivity

Muhammad Aslam HayatDirector PIRRC

26 Nov 2012PacINET, USP, Suva, Fiji

International Gateway

• ITU defines an international gateway as any facility through which electronic communications (voice, data and video) can be sent between domestic networks of one country and another

• IGW provide links either to an international cable system, or to a satellite through an earth station

• International gateways are also potential bottlenecks that may restrict traffic flows and thus cause artificially high prices

POI

ANS

ANS subscriber

IGWUndersea

Cable

International subscriber

VSAT

Is it natural monopoly?

• Traditionally, voice and data transmissions via submarine cables were seen as natural monopoly of incumbent operators, due to high costs of investment in infrastructure and its maintenance

• Natural monopoly argument no longer held true– Technological advances had greatly reduced cost of infrastructure– Deployment of VoIP services and VSATs have substantially lowered

cost of entry in provision of international services• Entry into international sector is now an irresistible force

which regulatory restrictions are unlikely to prevent• In countries which have attempted to maintain IGW

monopolies, illegal bypass can account for 30-60% or more of traffic

Cables in the Pacific

http://www.submarinecablemap.com/

Benefits of IGW liberalization

• A monopoly provider has no sufficient incentive to satisfy increasingly diverse demand for services

• Liberalization necessary in order to – enable competition, – reduce retail prices,– Improve quality of service,– increases in international bandwidth and lower costs in the provision

of international services– increase choice for consumers, – stimulate greater market efficiencies,– Improve investment climate in telecom,– Creates service sector jobs and exports through Business Process

Outsourcing,– lowering cost of business and facilitating trade and investment and

thereby raising overall employment and living standards

Regulatory role in liberalization

• Regulatory frameworks are needed to introduce

– Remove monopoly,

– encourage competition through lowering barriers to new market entrants,

– introduce sharing and collocation at landing/earth stations at cost-based or cost-oriented rates,

– require dominant licensee to provide a RIO to its competitors,

– encourage landing of multiple submarine cable systems

Various models

• Individual license for IGW (BD, FJ, WS)– Separate licenses for voice & data IGW (BD)

• ILD/LDI (IN, PK)

• Unified license (VU, NG)

• Converged license (PG, MY)

• Facility & non-facility based licenses (SG, LK)

• International Calling card license (WS*)

* Interconnection with ANS is yet to take place

IGW competition status in Pacific

Monopolies

• Cook Islands• FSM• Kiribati• Niue*• RMI• Tuvalu

Competition

• Fiji• Nauru• Palau• PNG• Samoa• Solomon Islands**• Tonga• Vanuatu

* IUS-N has own gateway for data** IGW competition is yet to take off

International DD – Fixed Line (Rates in USD)

CountryCalling from

Cook Islands Fiji FSM Kiribati

Marshall Islands Nauru Niue Palau PNG Samoa

Solomon Islands Tonga Tuvalu Vanuatu

Calling to

Cook Islands 0.41 1.95 2.76 1.50 - 1.97 0.99 1.39 0.38 1.01 0.84 2.46 1.64

Fiji1.26 1.75 2.76 1.50 - 1.97 0.35 1.39 0.37 1.01 0.39 1.53 0.44

FSM1.54 0.41 2.76 1.50 - 2.28 0.99 1.39 0.37 1.01 0.56 2.46 0.66

Kiribati1.54 0.41 1.75 1.50 - 1.97 0.35 1.39 0.37 1.01 0.84 2.46 1.64

Marshall Islands 1.54 0.41 1.75 2.76 - 2.28 0.35 1.39 0.37 1.01 0.56 2.46 0.66Nauru

1.54 0.41 2.50 2.76 1.50 1.97 1.50 1.39 0.37 1.01 2.23 2.46 1.64Niue

1.54 0.41 2.70 2.76 1.50 - 0.99 1.39 0.38 1.01 1.11 2.46 1.64Palau

1.54 0.41 1.75 2.76 1.50 - 2.28 1.39 0.37 1.01 0.84 2.46 0.66PNG

1.54 0.41 2.00 2.76 1.50 - 1.97 0.99 0.38 1.01 1.11 2.46 1.64Samoa

1.53 0.41 1.75 2.76 1.50 - 1.97 0.99 1.39 1.01 0.39 2.46 0.44Solomon Islands 1.54 0.41 3.20 2.76 1.50 - 1.97 1.50 1.39 0.77 1.11 2.46 1.64Tonga

1.54 0.41 1.75 2.76 1.50 - 1.97 0.35 1.39 0.37 1.01 2.46 0.66Tuvalu

1.54 0.41 2.50 2.76 1.50 - 1.97 0.99 1.39 0.38 1.01 0.84 1.64Vanuatu

1.54 0.41 2.40 2.76 1.50 - 1.97 1.50 1.39 0.37 1.01 0.84 2.46

International DD – Mobile (Rates in USD)

CountryCalling from

Cook Islands Fiji FSM Kiribati

Marshall Islands Nauru Niue Palau PNG Samoa

Solomon Islands Tonga Tuvalu Vanuatu

Calling to

Cook Islands 0.81 1.80 2.96 1.50 1.48 1.97 2.00 0.85 0.75 1.01 0.49 2.46 0.68

Fiji1.26 1.50 2.96 1.50 0.69 1.97 0.99 0.85 0.25 1.01 0.35 1.53 0.48

FSM1.54 0.49 2.96 1.50 1.48 2.28 0.99 0.85 0.75 1.01 0.49 2.46 0.68

Kiribati1.54 0.81 1.50 1.50 1.48 1.97 2.00 0.85 0.75 1.01 0.49 2.46 0.68

Marshall Islands 1.54 0.49 1.50 2.96 0.69 2.28 2.00 0.85 0.25 1.01 0.35 2.46 0.68Nauru

1.54 1.61 1.75 2.96 1.50 1.97 5.00 0.85 0.25 1.01 0.35 2.46 2.17Niue

1.54 0.81 2.30 2.96 1.50 1.48 5.00 0.85 0.75 1.01 0.49 2.46 2.17Palau

1.54 0.81 1.40 2.96 1.50 1.48 2.28 0.85 0.75 1.01 0.49 2.46 0.68PNG

1.54 0.81 1.80 2.96 1.50 1.48 1.97 2.00 0.25 1.01 0.49 2.46 2.17Samoa

1.53 0.49 1.50 2.96 1.50 0.69 1.97 2.00 0.85 1.01 0.35 2.46 0.48Solomon Islands 1.54 1.61 2.55 2.96 1.50 1.48 1.97 2.00 1.64 0.75 0.49 2.46 2.17Tonga

1.54 0.81 1.50 2.96 1.50 1.48 1.97 2.00 0.85 0.25 1.01 2.46 0.48Tuvalu

1.54 0.81 2.00 2.96 1.50 1.48 1.97 2.00 0.85 0.75 1.01 0..49 0.68Vanuatu

1.54 0.81 2.30 2.96 1.50 1.48 1.97 2.00 0.85 0.75 1.01 0.49 2.46

Open access to IGW

ICT for Greater Development Impact, World Bank Group Strategy for ICT 2012-2015

“Huge differences among countries in the price per unit of bandwidth are often explained by variations in

wholesale market competition and bottlenecks in the supply of international bandwidth, especially in landlocked countries. To address these problems

governments need to promote open access to international gateways and greater competition in the

supply of international bandwidth, with targeted interventions to stimulate the market as necessary.”

Some selected references

• ICT for Greater Development Impact, World Bank Group Strategy for ICT 2012-2015

• Telecommunications in the Pacific: Background Paper for Pacific Economic Survey 2008, prepared by World Bank Jakarta, Indonesia

• Competition in International Voice Communications by Carlo Maria Rossotto, Björn Wellenius, Anat Lewin, Carlos R. Gomez (World Bank Working Paper # 42)

• Trends in Telecommunication Reform 2006 by ITU• Liberalizing international gateways: Singapore’s experience: http://

www.itu.int/itunews/manager/display.asp?lang=en&year=2009&issue=01&ipage=26&ext=html

• Lessons from an international gateway liberalization by Rohan Samarajiva, LIRNEasia: http://lirneasia.net/wp-content/uploads/2008/06/rs_int_liberalization.pdf

• TRAI regulation on international telecommunication access to essential facilities at cable landing stations, 2007

• Gateway Liberalisation: Stimulating economic growth, GSM Association, 2007

Thank You

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